News Analysis

Anti-WTO Movement Widens Rift in World Body
But capitalist countries want a multilateral investment pact

Countries that have endorsed globalization and were instrumental in the creation of World Trade Organization eight years ago, particularly the United States, the European Union, Japan and other developed countries, are pinning their hopes in the coming Cancun conference that their agenda for greater trade and investment liberalization as well as the full implementation of tariff reduction commitments all over the world will move forward. But before they are able to do that, they have to face anti-WTO activists who are set to turn the fifth ministerial in Cancun, Mexico into a new battle for the outright dissolution of the world trade body.

By Bobby Tuazon
Bulatlat.com

Protesters in Montreal, Canada express their opposition to the coming WTO meeting in Cancun, Mexico.

The Sept. 10-14 fifth ministerial conference of the WTO in Cancun, Mexico is seen as a crucial event given indications of a widening rift between pro-globalists and the growing anti-WTO struggle throughout the world. Fractious debates are expected to surface over an anticipated pressure by first world countries led by the United States and the European Union to use the WTO as a venue for a new round of talks on a multilateral investment agreement and other items.

However, developing countries led by India, Malaysia, Brazil and South Africa, are trying to block the agenda if their demands for an assessment of the adverse impact of the GATT are not addressed satisfactorily. The more radical form of this opposition, led by Filipino militants and their foreign counterparts belonging to various political shades want the WTO process to stop altogether on account of the economic catastrophes that have been committed in the name of globalization. They will converge at Cancun where they will hold mass actions, peoples’ forums and other alternative forms of protest.

At home in the Philippines, Bayan and its allied organizations of workers and farmers – who have seen their plight at its worst state today under WTO – promised to hold mass protests and a camp-out that will culminate in a big rally outside the U.S. embassy in Manila. Similar protests are set to take place in the provinces.

Meeting in the Cancun conference are trade ministers from 146 member-countries of the WTO. But it will not be an all-business and beach-hopping binge for the ministers and the expected thousands of their entourages, observers and guests.

In a bid to grab world attention away from the ministerial conference, thousands of anti-globalization activists, workers, Zapatistas, Chiapas farmers and other advocates from all over the world will hold their own parallel people’s forums and workshops in Cancun, Mexico’s prime resort attraction.

Countries that have championed globalization and were instrumental in the creation of WTO eight years ago, particularly the United States, the EU, Japan and other developed countries, are pinning their hopes in the coming Cancun conference even as they push their agenda for greater trade and investment liberalization as well as the full implementation of tariff reduction commitments all over the world.

In 1999, huge mass protests and street riots derailed the third ministerial meeting in Seattle, Washington. The Battle of Seattle placed the process of globalization under international protest forcing the WTO to hold its fourth ministerial conference instead in Doha, Qatar in 2001. The ministerial conference was held in the princely, autocratic state of Qatar without a hitch given the fact that civil liberties are curtailed and anti-globalization protesters from foreign countries were denied entry.

From Doha where a compromise on a new round of talks was reached, the road taken by the major defenders of WTO policies was for making sure that a breakthrough will be achieved at the Cancun meeting leading to a new round of negotiations to tackle the four “Singapore issues”: foreign investment, competition policy, government procurement and trade facilitation.

Meantime, the steam generated by the Seattle protests and the growing opposition to the globalization paradigm has somewhat emboldened big developing countries led by India, Brazil, Malaysia and South Africa to call for a moratorium and a comprehensive review of the impact of globalization, in short, a strong stance precisely against the new offensive being mounted by the rich countries.

Recession

The fifth ministerial meeting of the WTO is being held at a time when recession continues to march in many developed countries. Lost in the economic recession in the United States over the last few years have been three million jobs – tens of millions more in other capitalist countries. No real recovery is in sight – despite the recent wars in Iraq and Afghanistan which some U.S. economists had wrongly predicted would lift their monopoly capitalist economy forward.  Japan, meanwhile, has been suffering a deflation of 1 percent yearly. Germany, the EU’s major economy, is also in the midst of a lingering recession causing its unemployment rate to hit 10.2 percent.

If these figures are already a big deal to the rich countries, the rot that many developing countries find themselves in is pushing many of them to cry foul in light of the globalization momentum. In the name of trade liberalization under terms dictated by the WTO and other globalization policies including privatization and labor contractualization, third world markets are being dumped with cheap food imports from the first world to the scale that is threatening local producers and farmers.

Social services including health and medicare are being torn down to pave the way for their privatization where the aim is not public service but profit. Millions of workers and government employees are losing their jobs with the adoption of contractualization systems and the corporatization/privatization of public agencies as well as major strategic industries like water and energy. Similar policies with the same results are also in effect in rich countries. And this is the reason why many people in these countries have found themselves joining hands with their counterparts in the developing world to resist globalization.

While not blind to the adverse impact of WTO policies, ministers and corporate executives of the rich countries blame the lack of cooperation of many developing nations in fulfilling to the optimum their obligations to the General Agreement on Tariffs and Trade (GATT) for the economic and social woes that they face. Their prescription to the poor nations: More of the same, and a new round of talks.

Investment liberalization

So at Cancun, the rich countries particularly the U.S., EU, Japan and Canada (as well as South Korea) are expected to push for the full reduction of tariff rates for agricultural products even as they will try to bulldoze a new set of agenda over which the WTO – as a trade regulatory body – has essentially no jurisdiction. Among these is a new round of talks leading to a multilateral investment agreement – a most contentious issue.

It is seen that, aside from market liberalization, a multilateral agreement on foreign investment will open protective economies particularly in the developing world to a more aggressive foreign investment. This, in turn, will boost corporate profits and possibly relieve first world economies of their current dilemmas.

Despite the existence of some 1,800 bilateral, sectoral and regional treaties related to foreign investment, there is no comprehensive multilateral agreement on foreign investment like the one now being sought by both the EU and the United States. Over the past 50 years, there were unsuccessful attempts to forge this type of agreement, mainly through the efforts of the U.S. under its new “international economic order.” Part of the resistance was the one posed successfully by countries in the socialist camp and those upholding protectionism as a means of protecting their emerging economies. But it was only at the Uruguay Round of Talks held from 1986-1994 that the issue of investment was brought under the GATT’s rubric.

To aggressively pursue its investment liberalization agenda, the U.S. government pressured the Organization of Economic Cooperation and Development (OECD) to push for a Multilateral Agreement on Investment (MAI) which, according to reports, included a “heavy dose of investment liberalization, protection of investors and a dispute resolution mechanism.” Negotiations on the proposed MAI collapsed in 1998, however.

Since then, it has been up to the WTO’s Working Group on Trade and Investment to serve as the multilateral forum for investment issues. In the current discussions, EU countries are pushing for new trade rules in the WTO that would give foreign investors new rights to enter countries more easily and to operate freely.

Myths

Many developing countries agree with anti-WTO activists about the myths of investment liberalization particularly the fallacy that FDI is a panacea for development. For instance, despite wide-scale investment liberalization measures since the 1980s, developing countries receive less than one-third of total FDI flows. Worse, the FDIs are concentrated in a few “emerging markets.” There is also no evidence to support the claim that FDI speeds up economic growth – much less that FDI is linked to economic growth. Conversely, Japan, China and South Korea enjoyed high economic growth without liberalizing their investment regimes.

Current frameworks of investment liberalization are extremely biased in favor of foreign investors’ rights at the expense of local capitalists. And this seems to be the reason why out of WTO’s total membership, 60 countries from the developing world are opposed to opening new negotiations on foreign investment liberalization at Cancun.

Yet, it is possible that the proponents of investment liberalization may muscle their way at Cancun by resorting to the widely-criticized “green room” process. In this technique, which is used by rich countries led by the United States, talks are held among a few selected member-countries to exert pressure and weaken resistance. Using this type of arm-twisting in Doha, the U.S. and company were able to force third world nations to commit to negotiations on the four Singapore issues after the fifth ministerial. The compromise was to give special deferential treatment to Third World opponents, such as health concerns, and a pledge to give them liberal access to first world markets.

In return, the developing countries adopted the Doha Ministerial Declaration: “We agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that Session on modalities of negotiations.” Glossed over in the Doha negotiations were third world demands to review the impact of GATT before any round of talks on bigger trade and investment liberalization are held.

And this is the reason why, as far as the anti-globalization and anti-WTO protesters are concerned, much is at stake in the coming fifth ministerial conference: How to convince governments, for instance, to stand up against rich countries in pursuing what activists say are actually transnational interests through the WTO.

On the side of the protesters, however, the anti-WTO movement appears to be not as solid as a rock. There are those – particularly richly-funded NGOs – who would stop at going beyond taking an observer’s seat in the ministerial meetings or holding alternative peoples’ forums to articulate their opposition to new WTO initiatives. The more organized – including leftists from the Philippines, farmers from Latin America as well as those from Chiapas and workers who may find themselves marching alongside anarchists from the U.S., Europe and Australia – will call for the dissolution of the WTO altogether. They promised to make their voice louder than what reverberated at Seattle. Bulatlat.com

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